The regional port competition with different terminal competition intensity

Abstract

This paper studies the regional container port competition problem which involves two port cities each with its own container terminal. We provide two-level game-theoretic models to characterize several practice-related issues, such as container terminal cooperation situation, and the difference between local in/out and transshipment container throughputs. Numerical experiments are conducted based on the port system in the Pearl River Delta area of China. We find that (1) the two ports in the heterogeneous regional port system should focus on differentiating services rather than compete with each other in every service; (2) the terminal cooperation may not be preferred by both of the port city governments; (3) the developed port will gradually dominate the transshipment container business in the system, leaving the developing port to focus its efforts on the local in/out container business instead.